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RepublicofthePhilippines

SUPREMECOURT
Manila
ENBANC
G.R.No.L40411August7,1935
DAVAOSAWMILLCO.,INC.,plaintiffappellant,
vs.
APRONIANOG.CASTILLOandDAVAOLIGHT&POWERCO.,INC.,defendantsappellees.
ArsenioSuazoandJoseL.PalmaGilandPabloLorenzoandDelfinJovenforappellant.
J.W.Ferrierforappellees.
MALCOLM,J.:
Theissueinthiscase,asannouncedintheopeningsentenceofthedecisioninthetrialcourtandassetforth
bycounselforthepartiesonappeal,involvesthedeterminationofthenatureofthepropertiesdescribedin
the complaint. The trial judge found that those properties were personal in nature, and as a consequence
absolvedthedefendantsfromthecomplaint,withcostsagainsttheplaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of
Davao.However,thelanduponwhichthebusinesswasconductedbelongedtoanotherperson.Ontheland
thesawmillcompanyerectedabuildingwhichhousedthemachineryusedbyit.Someoftheimplementsthus
used were clearly personal property, the conflict concerning machines which were placed and mounted on
foundationsofcement.Inthecontractofleasebetweenthesawmillcompanyandtheownerofthelandthere
appearedthefollowingprovision:
Thatontheexpirationoftheperiodagreedupon,alltheimprovementsandbuildingsintroducedand
erectedbythepartyofthesecondpartshallpasstotheexclusiveownershipofthepartyofthefirst
partwithoutanyobligationonitsparttopayanyamountforsaidimprovementsandbuildingsalso,in
theeventthepartyofthesecondpartshouldleaveorabandonthelandleasedbeforethetimeherein
stipulated,theimprovementsandbuildingsshalllikewisepasstotheownershipofthepartyofthefirst
part as though the time agreed upon had expired: Provided, however, That the machineries and
accessoriesarenotincludedintheimprovementswhichwillpasstothepartyofthefirstpartonthe
expirationorabandonmentofthelandleased.
Inanotheraction,whereintheDavaoLight&PowerCo.,Inc.,wastheplaintiffandtheDavao,Saw,MillCo.,
Inc.,wasthedefendant,ajudgmentwasrenderedinfavoroftheplaintiffinthatactionagainstthedefendant
in that action a writ of execution issued thereon, and the properties now in question were levied upon as
personaltybythesheriff.Nothirdpartyclaimwasfiledforsuchpropertiesatthetimeofthesalesthereofas
isborneoutbytherecordmadebytheplaintiffherein.Indeedthebidder,whichwastheplaintiffinthataction,
andthedefendanthereinhavingconsummatedthesale,proceededtotakepossessionofthemachineryand
other properties described in the corresponding certificates of sale executed in its favor by the sheriff of
Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a
numberofoccasionstreatedthemachineryaspersonalpropertybyexecutingchattelmortgagesinfavorof
thirdpersons.Oneofsuchpersonsistheappelleebyassignmentfromtheoriginalmortgages.
Article334,paragraphs1and5,oftheCivilCode,isinpoint.AccordingtotheCode,realpropertyconsistsof

1.Land,buildings,roadsandconstructionsofallkindsadheringtothesoil
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5. Machinery, liquid containers, instruments or implements intended by the owner of any building or
landforuseinconnectionwithanyindustryortradebeingcarriedonthereinandwhichareexpressly
adaptedtomeettherequirementsofsuchtradeofindustry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no
doubtthatthetrialjudgeandappelleesarerightintheirappreciationofthelegaldoctrinesflowingfromthe
facts.
Inthefirstplace,itmustagainbepointedoutthattheappellantshouldhaveregistereditsprotestbeforeorat
the time of the sale of this property. It must further be pointed out that while not conclusive, the
characterizationofthepropertyaschattelsbytheappellantisindicativeofintentionandimpressesuponthe
propertythecharacterdeterminedbytheparties.Inthisconnectionthedecisionofthiscourtinthecaseof
StandardOilCo.ofNewYorkvs.Jaramillo([1923],44Phil.,630),whetherobiterdictaornot,furnishesthe
keytosuchasituation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is
machinerywhichisinvolvedmoreover,machinerynotintendedbytheownerofanybuildingorlandforuse
inconnectiontherewith,butintendedbyalesseeforuseinabuildingerectedonthelandbythelattertobe
returnedtothelesseeontheexpirationorabandonmentofthelease.
AsimilarquestionaroseinPuertoRico,andonappealbeingtakentotheUnitedStatesSupremeCourt,it
washeldthatmachinerywhichismovableinitsnatureonlybecomesimmobilizedwhenplacedinaplantby
theownerofthepropertyorplant,butnotwhensoplacedbyatenant,ausufructuary,oranypersonhaving
onlyatemporaryright,unlesssuchpersonactedastheagentoftheowner.IntheopinionwrittenbyChief
JusticeWhite,whoseknowledgeoftheCivilLawiswellknown,itwasinpartsaid:
To determine this question involves fixing the nature and character of the property from the point of
viewoftherightsofValdesanditsnatureandcharacterfromthepointofviewofNevers&Callaghan
asajudgmentcreditoroftheAltagraciaCompanyandtherightsderivedbythemfromtheexecution
leviedonthemachineryplacedbythecorporationintheplant.FollowingtheCodeNapoleon,thePorto
Rican Code treats as immovable (real) property, not only land and buildings, but also attributes
immovabilityinsomecasestopropertyofamovablenature,thatis,personalproperty,becauseofthe
destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be
immovableeitherbytheirownnatureorbytheirdestinationortheobjecttowhichtheyareapplicable."
Numerousillustrationsaregiveninthefifthsubdivisionofsection335,whichisasfollows:"Machinery,
vessels,instrumentsorimplementsintendedbytheownerofthetenementsfortheindustrialorworks
thattheymaycarryoninanybuildingoruponanylandandwhichtenddirectlytomeettheneedsof
thesaidindustryorworks."(SeealsoCodeNap.,articles516,518etseq. to and inclusive of article
534,recapitulatingthethingswhich,thoughinthemselvesmovable,maybeimmobilized.)Sofarasthe
subjectmatterwithwhichwearedealingmachineryplacedintheplantitisplain,bothunderthe
provisionsofthePortoRicanLawandoftheCodeNapoleon,thatmachinerywhichismovableinits
natureonlybecomesimmobilizedwhenplacedinaplantbytheownerofthepropertyorplant.Such
result would not be accomplished, therefore, by the placing of machinery in a plant by a tenant or a
usufructuaryoranypersonhavingonlyatemporaryright.(Demolombe,Tit.9,No.203AubryetRau,
Tit.2,p.12,Section164Laurent,Tit.5,No.447anddecisionsquotedinFuzierHermaned.Code
Napoleonunderarticles522etseq.)Thedistinctionrests,aspointedoutbyDemolombe,uponthefact
thatoneonlyhavingatemporaryrighttothepossessionorenjoymentofpropertyisnotpresumedby
thelawtohaveappliedmovablepropertybelongingtohimsoastodeprivehimofitbycausingitbyan
act of immobilization to become the property of another. It follows that abstractly speaking the
machineryputbytheAltagraciaCompanyintheplantbelongingtoSanchezdidnotloseitscharacter
of movable property and become immovable by destination. But in the concrete immobilization took
placebecauseoftheexpressprovisionsoftheleaseunderwhichtheAltagraciaheld,sincethelease
insubstancerequiredtheputtinginofimprovedmachinery,deprivedthetenantofanyrighttocharge
againstthelessorthecostsuchmachinery,anditwasexpresslystipulatedthatthemachinerysoputin
shouldbecomeapartoftheplantbelongingtotheownerwithoutcompensationtothelessee.Under
such conditions the tenant in putting in the machinery was acting but as the agent of the owner in
compliance with the obligations resting upon him, and the immobilization of the machinery which
resultedaroseinlegaleffectfromtheactoftheowneringivingbycontractapermanentdestinationto

themachinery.
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ThemachinerylevieduponbyNevers&Callaghan,thatis,thatwhichwasplacedintheplantbythe
AltagraciaCompany,being,asregardsNevers&Callaghan,movableproperty,itfollowsthattheyhad
therighttolevyonitundertheexecutionuponthejudgmentintheirfavor,andtheexerciseofthatright
didnotinalegalsenseconflictwiththeclaimofValdes,sinceastohimthepropertywasapartofthe
realtywhich,astheresultofhisobligationsunderthelease,hecouldnot,forthepurposeofcollecting
hisdebt,proceedseparatelyagainst.(Valdesvs.CentralAltagracia[192],225U.S.,58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this
instancetobepaidbytheappellant.
VillaReal,Imperial,Butte,andGoddard,JJ.,concur.

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